30 June 2022

Risk Management processes : Perform Qualitative Risk Analysis

Purpose

  • Focus on the high-priority risks through qualitative risk analysis
    • At qualitative risk analysis process, you will arrange risks based on how much they can affect the project.
    • In risk identification, you should adopt a “No Restriction” policy where you encourage the identification of all possible risks.
      • Because of that, you are likely to discover many risks, but many of them will be of low impact on the project.
    • Qualitative analysis will filter those risks (into a watch list) and pinpoint risks that are worthy of further analysis.
    • This analysis has advantages of being relatively simple and fast and it usually yields good results.
      • It is so useful that in many projects you are able to proceed to risk response right after doing qualitative risk analysis.
      • However, this process is subjective since it depends on participants’ opinions and experience.
      • You should be particularly concerned with participants’ biases.
    • It is easy to use and can foster a common understanding of the different levels of probability and impact.
  • Advices
    • A qualitative risk analysis requires accurate and unbiased data if it is to be credible.
    • Use a risk matrix
    • The most widely used tool for this analysis is the risk matrix.
    • You can customize a risk matrix (to be more relaxed or stringent) based on the specific risk tolerance for the project.

Inputs

  • Project management plan
    • Risk management plan
      • Purpose
        • You will find useful information like the risk matrix and risk tolerance.
      • Roles and responsabilities for conducting risk management
      • Budgets for risk management
      • Schedule activities for risk management
      • Risk categories
      • RBS
      • Definitions of probability and impact
      • The probability and impact matrix
      • Stakeholders risk thresholds
    • Project type and an understanding of the work needed to complete the project
  • Project documents
    • Assumption log
      • Assumptions to test
    • Risk register
      • Purpose
        • To know the list of identified risks.
        • List of potential risks
    • Scope baseline
      • Purpose
        • Basically it will tell you what is your project.
        • If the scope is similar to other projects that were done before then you can use some of the assessment already done.
          • Not to copy and past but also not to start from scratch.
      • Project scope statement
      • WBS
      • WBS dictionary
    • Stakeholder register
      • Potential risk owners
  • Entreprise Environmental Factors (EEF)
    • Purpose
      • You can find industry specific risks and checklists.
    • Industry studies of similar projects
    • Published material, including data bases or checklists
  • Organizational Process Assets (OPA)
    • Purpose
      • Here, you will find the lessons learnt.
      • Knowing the effect of risks on similar projects can help you guess their possible effect on the current project.
    • Historical records
    • Scales for probability and impact
      • if they are standardized for your department or company
    • Data about the risks to be used during this step to measure their precision

Tools and Technics

  • Expert judgment
    • Risk workshops
    • Interviews
      • Possibility of bias
        • Be careful of biases by asking experts to justify their opinions as much as possible.
  • Data gathering
    • Interviews
      • Trust and confidentiality encouraging honest and unbiased assessments
    • Determine Additional Information Needed
    • Determine Frequency and Timing
  • Data analysis
    • Risk Data Quality Assessment
      • Purpose
        • This should be done at the beginning.
        • It basically refers to the level of confidence in the collected information about risks.
      • Questionnaire
        • Use of structured questionnaires to collect information that will assist with the recognition of the significant risks
      • Look for Trends
    • Risk Probability and Impact Assessment
      • Potential effect on one or more project objectives (schedule, cost, quality, performance, …)
      • Interviews
      • Meetings
      • Probability and Impact Scales
      • Assumptions Testing
    • Assessment of other risk parameters
      • Urgency
        • Risk urgency assessment
          • You rank the risks based on how soon in the project they are likely to happen.
          • You can use the project schedule to help you in this.
          • Urgent risks should be ranked higher than others.
      • Proximity
      • Dormancy
      • Manageability
      • Controllability
      • Detectability
      • Connectivity
      • Strategic impact
      • Propinquity
        • The degree to wich a risk is perceived to matter by one or more stakeholders.
  • Interpersonal and team skills
    • Facilitation
  • Risk categorization
    • Purpose
      • If you have many risks, say in the hundreds, you can use the RBS to group risks by source.
        • Thus, you can better rank them relative to each other.
        • Note, that I said “if”, meaning you have to option to use it.
        • Just emphasizing the fact that you don’t need to use all the tools.
    • Common root causes
    • Sources of risks
      • Risk Breakdown Structure (RBS)
        • The project manager encourages the project team to begin the grouping of identified risks by common causes.
        • The primary advantage to group risks by common causes during qualitative risk analysis can lead to further developing effective risk responses.
    • Affinity diagram
      • In an affinity diagram you categorize risks.
    • Useful categories
      • Project phases, project budget, roles and responsabilities, …
    • Areas of the project affected by risks
      • WBS
  • Data representation
    • Probability and Impact Matrix
      • You use a matrix to assess your probabilities and impact.
        • The risk matrix is the main tool in risk qualitative analysis.
        • Probability and impact matrix is a tool and technique that helps you in ranking the identified risks.
        • You can invite stakeholders to a risk analysis meeting, give each one a copy of the risk matrix and go though each risk to assess its chances of occuring and effect on the project.
    • Hierarchical charts
      • Determining Risk Ranking within the Project
    • Project Risk Threshold
    • Project Risk Score
  • Risk Meetings
    Go/No-Go Decision

Outputs

  • The outcome of qualitative risk analysis is an update to the project document, which includes numerically assigning values to the project objectives regarding overall impact.
  • Project document updates
    • Assumption log
    • Issue log
    • Risk register updates
      • Assessments of probability and impact for each individual risk
      • Priority level of risk score
        • Risk ranking for the project compared to other projects
      • Nominated risk owner
      • Risk urgency information
        • Urgent risks
      • Risk categorization
        • List of prioritized risks and their probability and impact ratings
          • List of ranked risks
          • List of the highest-ranking risks
          • Risks ranked based on their urgency
        • Risks grouped by categories
          • Risks grouped by their sources
        • List of risks requiring additional analysis in the near term
        • List of risks for additional analysis and response
      • Watch Lists
        • Watchlist (non-top risks)
          • List of risks with low impact on the project (watch list)
        • Watch list for low-priority risks
        • Watch list for risks requiring further analysis
      • Informations
        • Trends
        • Results of risk prioritization
    • Assumptions log updates
      • Chances are you made assumptions in your project because enough information weren’t available.
      • Such assumptions need to be updated.
      • Remember that assumptions are recorded in a separate log than Risk register.
    • Risk report
      • Most important individual risks
      • Prioritized list of all identified on the project
      • Summary conclusion
    • Go/no-go decision
      • Determine If you should proceed to the Perform Quantitative Risk Analysis Process or to the Plan Risk Responses Process
      • Proceed to the Perform Quantitative Risk Analysis process if
        • You believe that you have identified “all” project risks
        • It is worth the time and money on your project
        • You have a very high-priority or visible project
        • There is very little tolerance for cost or schedule overruns
      • Proceed to the Plan Risk Responses process if
        • You have a small budget or short length project
        • You are new to risk management and have not perfected quantitative risk analysis

Tricks

  • Use a Chart
  • Reducing Bias
  • Document the Results
  • Move Risky Activities Forward
  • Move Common Causes of Risk Forward
  • Show Risky Activities on the Network Diagram
  • Note Path Convergence and Path Divergence
  • Build Historical Records
  • List the Activity Risk Score and Person Assigned on the BarChart

PMI-RMP Certification exam flashcards

Created : 20/05/2022

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